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The Morning Dispatch: A V-Shaped Recovery?
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The Morning Dispatch: A V-Shaped Recovery?

Plus: Excerpts from our Dispatch Podcast interview with George W. Bush.

Happy Friday! We almost ripped up today’s newsletter to focus entirely on this, but the Bears traded up last night to draft Justin Fields, their quarterback of the future. Declan hasn’t been this excited about the team since they traded up to draft Mitch Trubisky, their then-quarterback of the future, in 2017.

Sure must stink having your QB situation overrun by chaos, right Steve? (Editor: Nah.)

Quick Hits: Today’s Top Stories

  • The Commerce Department reported on Thursday that the U.S. economy grew at a 6.4-percent annual rate in the first quarter of this year, up from 4.3 percent in Q4 2020. The growth was driven largely by personal consumption expenditures and nonresidential fixed investment.

  • The Food and Drug Administration announced plans on Thursday to ban menthol cigarettes and flavored cigars within the year. “Banning menthol—the last allowable flavor—in cigarettes and banning all flavors in cigars will help save lives, particularly among those disproportionately affected by these deadly products,” Acting FDA Commissioner Janet Woodcock said.

  • Days after the Financial Times reported China was set to announce its first population decline in decades, the Chinese Communist Party’s National Bureau of Statistics released a brief statement saying the country’s population actually increased last year. It did not, however, provide any additional details, saying more information would be made available when the census—which has been delayed several weeks—is released.

  • Labor Department data found that initial jobless claims dropped by 13,000 week-over-week to 553,000 in the week ending on April 24.

  • A White House official told CNN that the number of unaccompanied migrant children being detained in bleak U.S. Customs and Border Protection facilities has fallen from a peak of 5,767 on March 28 to 954 as of Wednesday. Children are now being transferred more quickly to more hospitable temporary shelters being stood up across the country.

  • At least 44 people are dead following a deadly stampede in Israel as an estimated 100,000 people were gathered at Mount Meron to celebrate the Lag B’Omer holiday.

  • The Senate voted unanimously yesterday to confirm former Democratic Sen. Bill Nelson as head of NASA.

  • The United States confirmed 59,362 new cases of COVID-19 yesterday per the Johns Hopkins University COVID-19 Dashboard, with 5.1 percent of the 1,161,092 tests reported coming back positive. An additional 867 deaths were attributed to the virus on Thursday, bringing the pandemic’s American death toll to 575,193. According to the Centers for Disease Control, 37,226 Americans are currently hospitalized with COVID-19. Meanwhile, 2,721,079 COVID-19 vaccine doses were administered yesterday, with 143,793,565 Americans having now received at least one dose.

GDP Soars in First Quarter of 2021

U.S. gross domestic product (GDP) grew 1.6 percent during the first three months of 2021 according to advanced estimates reported by the Commerce Department on Thursday, a seasonally adjusted annual rate of 6.4 percent. Those figures were 1.1 percent and 4.4 percent in Q4 2020, respectively. The growth was driven by a combination of America’s vaccine rollout, loosening pandemic-related restrictions, and hundreds of billions in federal stimulus money.

Although the economic outlook is brightening, the Federal Reserve on Wednesday opted to keep interest rates near zero until unemployment reaches healthier levels and inflation notches closer to the central bank’s 2 percent target.

“We continue to expect it will be appropriate to maintain the current zero to quarter-percent target range for the federal-funds rate until labor market conditions have reached levels consistent with the committee’s assessment of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time,” Federal Reserve Chairman Jerome Powell said Wednesday. “I would note that a transitory rise in inflation above 2 percent this year would not meet this standard.”

Inflation has risen in recent months—the Bureau of Labor Statistics reported the Consumer Price Index experienced its highest year-over-year growth in March since August 2018—but not enough to concern Powell. “We are … likely to see upward pressure on prices from the rebound in spending as the economy continues to reopen, particularly if supply bottlenecks limit how quickly production can respond in the near term,” he said. “However, these one-time increases in prices are likely to have only transitory effects on inflation.”

“The Fed will keep their accommodation going a lot longer than the market’s pricing in, because they’re looking for a complete recovery,” Ed Moya, a senior analyst at Oanda, told The Dispatch

Thankfully, unemployment decreased to 6 percent in March, and will likely be shown to have reached even lower levels in April when those figures are released next week. The number of weekly new unemployment claims is also lower than at any point since last March, having declined for three straight weeks. Still, the labor force participation rate continues to hover around 61.5 percent (down from 63.3 percent pre-pandemic), and there are approximately 8.4 million fewer people working now than there were last February.

“The job market is not at pre-pandemic figures, but frankly, that’s an impossible comparison, because pre-pandemic, we had the lowest unemployment rate in fifty years—3.5 percent,” said senior Manhattan Institute fellow Brian Riedl, acknowledging we’re unlikely to return to that level anytime soon. “But for coming out of a deep recession, having fewer than 600,000 first time unemployment filings in one week is fabulous; it’s actually starting to look a little bit like a V-shaped recovery.”

President Joe Biden touted this progress in his address to Congress on Wednesday, but argued it wasn’t enough, and made his case for trillions more in federal spending. “The economy created more than 1,300,000 new jobs in 100 days, more jobs in the first 100 days than any president on record,” he said, citing the International Monetary Fund’s 6 percent growth projection for the United States. “That will be the fastest pace of economic growth in this country in nearly four decades. America’s moving, moving forward. But we can’t stop now.” 

“We’re at a great inflection point in history. We have to do more than just build back, we have to build back better,” he said, touting his American Jobs Plan and American Families Plan.

But strictly from the perspective of economic growth, the country is likely to continue to boom with or without additional spending. Analysts are optimistic that these trends show no signs of letting up, and might even accelerate in the second quarter as warmer weather and vaccinations trigger a massive wave of consumer spending in the leisure, hospitality, and transportation industries. “I think the recovery is even going to intensify next quarter,” Moya said. “You are probably going to see, I think, double-digit growth.”

George W. Bush Paints E. Pluribus Unum

Sarah and Steve recorded an episode of The Dispatch Podcast with former President George W. Bush in Dallas yesterday, and it’s available here.

The interview included a discussion of Bush’s latest book, Out of Many, One: Portraits of America’s Immigrants, a fascinating look at 33 immigrants and their contributions to America. But the conversation encompassed a whole bunch of topics: the current border crisis; Biden’s big spending; Bush’s failed attempt to reform Social Security; and the future of the Republican Party. We’ve pulled out some of his key responses below, but we hope you’ll give the whole thing a listen—and share it widely.

On not getting immigration reform done during his presidency: “It’s my fault. I tried to reform Social Security before reforming immigration. And, you know, I was warned. I’ll never forget a bunch of Republicans came to see me and said, ‘Hey, we hear you’re putting Social Security reform in your State of the Union.’ It’s 2005, and I said ‘Yeah I am, I campaigned on it. I mean, I was quite explicit about that and immigration reform.’ And they said, ‘Well, we don’t think you should do that. As a matter of fact, we’re not gonna support it.’ I said, ‘You got to be kidding me. I’m the Republican standard bearer, I just won.’ I said, ‘Why aren’t you gonna support it?’ They said, ‘We’ll lose seats.’ And I said, ‘We’ll lose seats in the next midterm if we don’t do big things.’ But I got stubborn and tried to run with Social Security; it fizzled out. But I do believe if I’d surprised everybody and gone with immigration first, we might have got ahead of the populist uprising on the issue.”

On the current crisis at the border, and whether Biden is to blame: “I think finger pointing makes it hard to get something done. It’s still a polarized electorate, which makes it harder to get policy done. I think the change of administrations enabled the coyotes and the propagandists and the exploiters to say, ‘Alright, now we can get you in.’ And these people are so desperate. And they’re so scared for their lives. They pay enormous sums of money, and oftentimes are, you know, fooled.”

On current levels of federal spending: “It puzzles me to think about the lack of regard for inflation. And you know, I remember 1978 and ’79, double-digit inflation, double-digit unemployment, double-digit interest rates. And so, you know, there’s an economic theory out there that I don’t understand. And I guess it’s one of the blessings of being 74 years old and, you know, maybe the chickens won’t come home to roost until I’m long gone. But they’ve got to come home to roost. You got all this money floating around, and debt, and it’s gonna be really problematic.”

On the future of the Republican Party: “I think Republicans will have a second chance to govern, because I believe that the Biden administration is a uniting factor, and particularly on the fiscal side of things. So, you know, we’ll see. But I know this: That if the Republican Party stands for exclusivity, you know—used to be country clubs, now evidently it’s white Anglo-Saxon Protestantism—then it’s not gonna win anything.”

On whether America is a compassionate country: “There are millions of acts of compassion that take place on a daily basis in America that most people don’t know about. It’s really one of the unique aspects of our country. You know, many societies have forfeited compassion to government. But government’s not compassionate. Compassion exists because people’s hearts are pure, more pure, because they do want to love somebody. And also, one of the themes in this story is religion. Catholic Charities, for example, as part of the compassionate agenda. … My whole point on all this immigration debate and stuff is, I think if we valued life as precious and every life matters, that we’re all God’s children, that all of a sudden the tone of the debate might be a little better.”

Worth Your Time

  • A couple months back, Declan wrote a piece comparing and contrasting today’s Republican Party with the late-stage Whig Party in the 1850s. Daniel Gullotta responded yesterday with a thoughtful piece for The Critic, arguing Jacksonian Democrats are an even better historical analog for the modern GOP. “Because of the Whigs’ eventful collapse, historians have typically highlighted their internal dramas, shaky alliances, and unreconcilable differences,” he writes. “But the Democratic Party of the antebellum era was not without its own competing wings, strange bedfellows, and unstable partnerships.” Gullotta sees some parallels. “Antislavery Northern and master-race Southern Democrats found themselves increasingly at odds with one another, feuding over the direction of the party as well as the nation,” he notes. “With Trump’s defeat in 2020, the question is whether or not Never Trumpers will formally join the Democratic Party, or try and reform the Republican Party, or embrace an exile from party politics.”

  • The FDA ban on menthol cigarettes—which are disproportionately used by black Americans—is a great example of how the most obvious approach to governmental problem solving may not be the best. Most reasonable people agree that cigarettes are bad for your health, and society would be better off with fewer people addicted to them. But is a federal ban the best way to go about achieving that goal? The FDA says the move will only apply to manufacturers, distributors, and retailers of menthol cigarettes—not consumers of them—but people will find ways around that. And then what? “Any prohibition on menthol and flavored tobacco products promises continued over-criminalization and mass incarceration of people of color,” the American Civil Liberties Union warned last year. “Banning menthol is now pitched as a social justice issue,” Jacob Grier argues in Reason. “But if we take the stated preferences of menthol smokers seriously, the racial politics cut the other way. White smokers would remain free to purchase the unflavored cigarettes that most of them currently consume, while black smokers would be paternalistically forbidden from exercising their own desires and subjected to policing of illicit markets if they try to fulfill them.”

Presented Without Comment

Also Presented Without Comment

Also Also Presented Without Comment

Toeing the Company Line

  • Jonah was joined by New York Times reporter Robert Draper on the latest episode of The Remnant to engage in—and we quote—“punditry ranker than even the most devoted Remnant listener could imagine.” The pair discussed Biden’s address to Congress, Robert’s latest piece on Liz Cheney’s role in the Republican Party, Watergate, and more.

Let Us Know

Now that our excellent producers Caleb and Ryan have been able to wrangle a former president onto the Dispatch Podcast, the sky appears to be the limit. Who would you like to see Sarah and Steve interview next?

Reporting by Declan Garvey (@declanpgarvey), Andrew Egger (@EggerDC), Haley Byrd Wilt (@byrdinator), Audrey Fahlberg (@FahlOutBerg), Charlotte Lawson (@charlotteUVA), Ryan Brown (@RyanP_Brown), and Steve Hayes (@stephenfhayes).